>> the ceos of manufacturing committee's were in front of the senate commerce committee to testify on supply-chain shortages and investment in

future technology. the hearing runs to and 1/2 hours. [inaudible conversations] [inaudible conversations] >> come to order. we are here this morning to talk about developing next-generation technology for innovation.

we are joined by distinguished panel of manufacturers, people who used this product is a cortical part of our supply chain and welcome all of them who are with us today. one witness joining us virtually, mr. preston faith and appreciate him joining us. we are also joined by one of our colleagues who wishes to make a statement and that will follow senator wicker and i. the semiconductor industry is a uniquely american story. it has shown the importance of innovation and building in the united states. the first transistor was demonstrated in new jersey in 1947. in 1958, the missourian attended college on the g.i. bill and demonstrated the first integrated circuit. the semiconductor industry was

the benefit a federal purchasing power, federal r&d helped us to get to the moon, to build our security leadership and launched the information age economy so i am pleased the united states has played such a leadership role but when it comes to manufacturing today in the united states we are falling behind. semiconductors underpin every aspect of our national and and economic security and yet we are short on the amount of advanced logic building at scale, that has to change. over 90% of the most advanced chips come from one island in the pacific ocean, taiwan. i believe in global trade but i also believe chip security is as important as food security. that is why we need to demonstrate leadership to make investments in r&d as we seek a bill the committee work hard to

get out last year. our overreliance on vulnerable global supply chains, without having an alternative ready to go, with economic security risks, a lesson we have already learned and we need to change direction. with the automotive sector thousands of americans have worked and endured layoffs and shortages, the global automotive industry suffered $200 million in losses and ford cut production at we ate plants in recent months. the cost of a used car, don't know where you can show that, the cost of a used car has gone up 41% and new cars 12%. a lot of this is due to the semiconductor shortage. the cost of a used car has gone up, why would that be? used cars already have the electronics.

if you want to buy a new car you probably have to wait because the car companies don't have enough semiconductors. people who can easily afford a new car and need one but can't get one due to the shortage are instead buying used cars and that's driving up the price. anyone knows that the people who can afford the extra 6 months are not the people really feeling the pain. it's the person whose radiator blue out last week and needs anything on four wheels to get them to their job. that is basic used car, the might have gone up $5000 in cost, an additional 41%, and an extra $2000 is just a trip the family doesn't get to take or next month's rent that can't get paid. the impacts of this are really affecting american consumers. our national security front

just reported counterfeiters are trying to exploit the semiconductor shortage by introducing fake chips into the market raising the chances the critical infrastructure and defense systems could be compromised. the shortage is also a setback in our efforts to remove foreign to look munication electronics that could be compromised by backdoors. according to the telecommunications industry, wait times for some networking equipment is now 50 weeks. the cost of the working equal and has raised 12% and price gaucher's are selling chips for 100 times their normal price. that's no way to handle it. relying heavily on one country and largely one company creates a lot of targets for hackers. 18 months ago security researchers found hacking campaigns the compromise twee 7 taiwanese chip manufacturers to steal semiconductor chips

designs. all of these are reasons we need to get this done and get to conference with our colleagues, these bills have a $2 billion investment specifically for our department of defense to secure microelectronics supply chain required for the national security mission. the shortages that we have today if we don't address them are going to continue well into the future because the world needs 1 trillion chips to be produced. that was in 2018. in 2021 we need 1.2 trillion chips produced every year. in 2031, that will be 2 trillion chips per year. our current boundaries are already working overtime building new foundries has to be part of a long-term solution and we need to send that price signal today. if we do nothing these

shortages are just an example of what is to come. i know we will hear from paccar who is going to tell us how every aspect of the freight is being affected even if it is not a high tech products. if you don't have trucks to move the products in our supply chain because you don't have enough trucks we are affecting every aspect of the supply chain so clearly we are here to talk about the next generation of chips and how the united states keeps its leadership and advanced manufacturing. that is why we are going to hear from tim archer on how important lithograph he is important for the united states to stay ahead. we are happy to be joined by the witnesses today, 288 days since the senate passed the useca bill. it's time for us not to wait another day but to get this done and keep america's leadership going in the right direction. i turn to my ranking member, senator wicker.

>> thank you, madam chair and good morning, today's hearing on semiconductors could not be more opportune and there is not a more important hearing on capitol hill this morning. the covid 19 pandemic exposed the fragility of the supply chains we depend on for public health, national security and economic prosperity so semiconductors are the lifeblood of modern industrial production, the chip shortage over the past two years has caused and made worse many of our supply chain disruptions. today's witnesses play key roles in the broader semiconductor ecosystem which includes equipment manufacturers, chip producers and industries that consume large quantities of chips. i would like to extend a

special welcome to preston feight, ceo of paccar, which was reported to senator cantwell and me. the associate in columbus, mississippi has produced hundreds thousands of world-class engines for heavy trucks and provided good paying jobs for talented and motivated workforce. i hope preston feight and other witnesses can give the committee a sense of the impacts posed by the chip shortage on their businesses, their workers and america's global competitiveness. the may conductors have become more important to global commerce, the united states has for decades neglected the industry. america's share of manufacturing has fallen 40% in 19902 about 12% today. foreign governments including china seized on the lack of us leadership in this area and as a result we are now entirely dependent on foreign production of the most cutting edge chip

technology. chip production, innovation and high-paying jobs all went overseas, leaving us dangerously exposed. the committee would benefit from our witnesses perspectives on how we got to this situation, specifically why other countries have displaced the united states as the center of gravity in semiconductors. the good news is congress has an opportunity to restore american leadership in semiconductors in the short and long run. i'm hopeful the house and senate leaders will come together in conference committee to reconcile the differences between us innovation and competition, useca and the house passed america competes act. both improve the chips act which would provide tens of billions of dollars to incentivize thomistic chip manufacturing to stabilize the supply chain and make long-term investments in r&d. for our part, senator cantwell

and i helped shepherd useca to passage in the senate by a 68-32 vote. we are ready to go as the chair indicated. i'm confident a fair conference process will produce landmark legislation to keep america ahead in r&d. . i also ask our witnesses to comment on the importance of the chips act, and what it would mean for their businesses. vladimir putin's illegal war on ukraine has shown what can happen when we rely on dictators to maintain economic stability. russia's criminal war of aggression has exposed long-term dependencies, sent prices for gas, wheat and industrial metals soaring. unfortunately russia is not the

only strategic competitor with designs on other countries. china has demonstrated aggressive behavior toward taiwan and stated its intent to challenge taiwan's sovereignty and independence and taiwan accounts for 92% of the world's most advanced semiconductor manufacturing. think of the consequences if china were to invade our taiwanese partner. let us keep that scenario in mind as congress continues its critical work on restoring american leadership in this vital industry. thank you, senator cantwell. >> thank you, i also agree with your statement so you and i on the same page and hopefully. will get our colleagues on the same page, we've been joined by the chairman of the finance committee who played a leadership role in chip legislation and is here to introduce one of our witnesses. welcome to the commerce committee, a committee you

served on for quite some time but still keep very close tabs on you when you keep close tabs on us particularly when it comes to privacy legislation so thank you for being here. >> thank you, chair cantwell and ranking member wicker for your important remarks and for the chance to be able to introduce the ceo of intel, pat gelsinger. i am a proud alum of the commerce committee and senator wicker, i recall the brevity for the cause. it has been nearly 50 years since intel's first investment in my home state of oregon. the company pat gelsinger leads is my home state, largest private employer, upwards of 20,000 oregonians work at intel. these colleagues, good paying jobs, not only add to our

state's economic vibrancy but they helped to keep oregon and our country at the forefront of tech leadership around the world. a little over a year ago pat returned to intel where he spent three decades earlier in his career. he and i have had many discussions about what chip manufacturing needs to oregon and the entire country. from the time the typical american gets up in the morning to when they go to bed at night, and sometimes even while they are sleeping they interact with thousands of semiconductors. congress is finally waking up to the fact that computer chips are the beating heart of the 21st-century economy. the semiconductor supply chains made it very clear how essential chips are to the health of our economy and our everyday lives.

without understanding there's a big bipartisan interest in supporting a domestic vibrant domestic chip manufacturing sector. under pat's leadership intel is stepping up, intel has committed to continued investment in oregon and committed to putting billions of dollars of their money to build new manufacturing capacity in the united states. as you both have noted congress has got to step up and do its part to launch america's chip manufacturing revival. there's a big opportunity ahead of us to build a more resilient economy and create many thousands of high skill high wage jobs in our country. pat and his team at intel are going to be at the forefront of the effort. let me close with this. of congress fails to do its part you both have made clear

our country is going to pay dearly, that's why failure here is unacceptable and it is important to recognize this is the beginning of a much larger effort. everybody here has a busy schedule so thank you for giving me the chance to introduce pat gelsinger, ceo of oregon's largest private employer and i appreciate the chance that he will have to describe what his company's work is all about and why it is so critical to my home state of oregon and our country's economic future. >> we know how busy everybody is, we appreciate it. so please start us off, pat gelsinger. >> good morning, thank you for that most kind introduction and to the members of the committee thank you for the opportunity to speak with you today and your support for funding the

chips for america act. every aspect of human existence is becoming digital and everything digital runs from semiconductors. we provide examples of show and tell, the most advanced high-performance computing components. the latest generation of 7 nm server and client products and the first-ever samples of our four nanometer next-generation client product as well. this is what we are talking about. the most advanced components on earth. semiconductors are the foundation for technologies including artificial intelligence, 5g autonomous vehicles and iot, our economic and national security are dependent on semiconductors. digital transformation has led to unprecedented demand for chips made more acute by the covid pandemic and disruptions in the global supply chain. the chip shortage cost the us economy $240 billion last year. we expect the shortage will continue into at least 2,024.

america showed leadership when congress passed the chips act but the situation has grown more serious since then and the supply chain shortage is truly global. that you needed began its work on their chips act a year later than congress, i expect you but he did funding will be made available for this year. other governments are aggressively offering significant incentives to semiconductor companies like ours to build on their shores. we must look beyond short-term capacity and recognize what us chip leadership entails with four areas of focus, incentivized manufacturing on us soil, supercharged research and develop and, third, address the skills gap and forth, enhance our national defense. when it comes to manufacturing, the world needs geographically balanced resilient supply chains. in 1990, 80% of semiconductors were built in the us and europe. today 80%, with only 12% in the us and half of that in intel.

asian countries moved aggressively to attract this industry was strong incentive policies. as a result the operating cost to manufacture in east asia's 30% % to 50% cheaper compared to the us. this is particularly significant for investment of this scale, a modern advanced semiconductor fab cost $10 billion to build and equip. focus on semiconductor demand will double by the end of the decade to $1 trillion. currently only the united states, south korea and taiwan manufacture the leading chips the power everything from your computer to the joint strike fighter. for our entire 53 year history of the company we have performed the majority of our r&d and manufacturing in the us. we have put our chips on the table to help the us regain process technology and manufacturing leadership. in the last year alone intel has announced $43 billion of us manufacturing investments with

expansions in new mexico to arizona and ohio. our initial hub, our initial hub in ohio will establish the first advanced semiconductor in the midwest from the company that helped create silicon valley, we are now creating the silicon heartland. i assume we receive support from the chips act, total investment could grow to one hundred billion dollars over the next decade. we thrown our factory doors open wide to provide capacity for us and global founder companies, we seek to rebuild the entire supply chain on us soil. intel is one of the world's top r&d spenders. in 2021 we invested $15 billion in r&d until creating the support of the national semiconductor technology center and national advanced packaging manufacturing program for the chips act. i also implore congress to

restore the ability to conduct r&d expenses, policy that has been in place for decades. these research partnerships and restored deduction will drive the lab to fab pipeline. our workforce consists of well-paying jobs across construction, skill manufacturing and research, increasing access to stem education is essential for building a talented, diverse pipeline, intel detailed plans to invest $100 million over the next decade with community colleges and universities and the us and nsf, building up of us commercial capacity is essential for defense and national security. we seek vibrant world leading commercial capacity leveraged with the additional requirements of defense and intelligence. further we encourage a strong increase in partnership with you but he did to meet our mutual global needs.

almost all the critical technologies and semiconductor comment and manufacturing are in the us or the dirksen senate office building. i want to thank you for the opportunity to testify for committee support of the chips act, we are slated to break ground in ohio this year. i challenge congress to find a path forward in chips act funding before then. i want to go bigger and faster. thank you very much, look forward to your questions. >> thank you for that testimony and hopefully we will get to the questions we drilled on on technology and why it is so important in its application. we appreciate that micron's specific business even though you are located in 7 different states. mehrotra has been ceo since 2017 and award winner of the ieee awards for contributions to your technology so thank you for being here. >> i'm honored to appear before

you to talk about the semiconductor industry and it is important in helping the united states to maintain global -- let me start over again. members of the committee which i'm honored to appear before you to discuss the semiconductor industry and its importance in helping the united states maintain global competitiveness and secure a leadership role in semiconductor manufacturing and critical innovation in future technology. i commend this committee for its leadership on these important issues. with your permission i submit my statement for the record. escalating geopolitical risks have highlighted the ability to reconcile and pass an innovation and competition build includes full funding for the chips act and investment tax credit, part of the bipartisan act. these incentives together would invigorate domestic

manufacturing in the semiconductor industry and allow companies to invest with confidence for the future. together these developments will kickstart investment and workforce development, r&d, innovation and expansion of manufacturing in the near term. the leading edge of semiconductor manufacturing technology in micron is leading the world in this technology which we are proud of the almost 50,000 patents we hold. nhs can be found anywhere data is processed, cell phones, automobiles, computers, defense systems, truly foundational for all future technological innovation and development. micron is the only company developing storage technology in the us with operations in 9 different states. we are headquartered in boise, idaho with 43,000 team members worldwide, nearly 10,000

employees are us-based. and we had a design center in atlanta, georgia, first location in the southeast giving access to diverse talent. i leave you with one key take away today. the us government means to level the playing field and create incentives to support investment in domestic semiconductor manufacturing facilities. nearly every other country that has a significant share of semiconductor manufacturing offers major government incentives including grants and tax based. the federal government does not. funding under the chips act and refundable investment tax credit are both needed to ensure department and continued ability of a scaled up industrial base to guarantee domestic supply of semiconductors, both leading-edge and legacy chips into the future. i want to emphasize the chips

legislation is necessary but not sufficient. the refundable investment tax credit is equally important to enable confident long-term investment in significant manufacturing infrastructure. micron has announced plans to invest one hundred $50 billion globally over the next decade in leading-edge memory manufacturing and research and development. we continue to explore plans to build new plants in the united states. our expansion plans would constitute one of the largest single semiconductor investment in the history of the united states, require close coordination with federal and state partners to ensure economic viability of operations in a global competitive marketplace. however, to be commercially viable over the long term, we must produce at high volume consistently. multiple facilities required to achieve this case, each costing

tens of billions of dollars fully equipped. technological advancements are extensive. our competitors abroad have benefited from 35 to 45% lower operating costs due in part to investments of other governments. this is an opportunity to change the trajectory and put the us on competitive ground for the future. i urge all parties to help the chips act into law. chip funding and the refundable investment tax credit is set the stage for a chance to transform investment in large-scale leading-edge in the united states, and ensure the united states does not lose out to its competitors abroad. thank you again, members of the committee, for the opportunity to testify today and i look forward to your questions. >> thank you for your testimony, appreciate you being here.

we are now going to go to mr. preston feight who is joining us from europe. paccar is located in the state of washington and we appreciate them as a manufacturer of heavy-duty trucks. i know he wanted to be here in person but it is so important to get his viewpoint on how this shortage affects the supply chain and the transition to where paccar would like to go. very much appreciate you joining us, thank you, we will go to you. >> thank you. another distant list member of the committee, thanks for inviting me to testify today. we manufacture trucks, our truck brands represent 30% of the marketing us and canada, 16 in europe.

paccar was a manufacturer of heavy trucks, 1/3 in washington state and people operate in new york factories, trucks in washington state and ohio, in texas as noted earlier in mississippi. paccar has innovation centers in washington state, texas, california that is where we develop technology leading 0 emissions autonomous and connected vehicles. thanks for your bipartisan work to discuss semiconductor supply shortages. the chip shortage has limited reduction of commercial parts for a year leading to a shortage of trucks throughout the country, distribute in supply chains across numerous industries, raised prices for consumers and delayed access to could hold goods and services to businesses and communities. 70% transported on a truck. over 80% of us communities

depend exclusively on trucks to deliver food and agricultural products, fuel and medicine, manufacturing, business supplies and consumer goods from groceries to automobiles. we all experience the importance of the trucking industry during the pandemic and more trucks are needed now to build new housing, highways, bridges, clean energy infrastructure and communications networks. basically america's economy moves on trucks, and truck manufacturers and suppliers need adequate and affordable supplies of semiconductors to build and keep trucks on the road. instead we continue to face shortages. today throughout the industry thousands of unfinished trucks are parked across the country waiting for chip enabled components and additional trucks are out of service waiting for repair parts. this is disturbing considering the entire trucking market

requires an estimated 13 million semiconductors compared to a total semiconductor industry output of 1 trillion chips. just one of every 86,000 semiconductors needed to keep america and supply chains moving. a year ago during the pandemic there was a legitimate event like covid related plant shutdowns, ice storm in texas and a fire in japan that led to chip delays. to mitigate the issues associated with those events truck manufacturers spend a lot of money in medium and long-term engineering redesigns to impact chip constraints and engaged to align on best practices. still shortages remain and premium prices purchase chips on the market and it is not possible to purchase chips directly from industry suppliers to chip manufacturers. these prices are often 20 to 30 times higher than contract prices. furthermore, manufacturers see

lack of clarity on semiconductor delivery schedules and experience cancellations from our suppliers often with inadequate visibly provided. semiconductors are critical for necessary production of trucks, this creates turmoil for all manufacturers who must manage immediate production changes or be forced to shut down plans. something put the fabric of america is adversely impacted when truck factories are forced to shut down or curtail production due to these shortages. to address the costly impact on america's trucking industry and broader economy we suggest companies requesting chips act funding be required to meet the needs of american critical businesses including truck manufacturers before they receive us taxpayer dollars. this could be accomplished using the critical infrastructure workforce guidance developed by dhs, cybersecurity and infrastructure security agency which was used throughout the

pandemic to ensure continued operations. we are concerned without upfront conditions on the use of chips act funding the supply constraints and allocations which limit trucks to deliver essential goods and services for communities, to ensure accountability of public funding and provide near-term relief to america's trucking industry and supply chains we recommend applicants for chips act funding be required to sue but a plan to the commerce department detailing how their existing semiconductor allocation strategy and investment decisions are currently and will in the future prioritize production of semiconductors to support critical infrastructure industries and related jobs in the united states. thank you again for the opportunity to share our perspective and your efforts to strengthen economic competitiveness. we look forward to your questions. >> reporter: thank you for that suggestion on critical businesses.

it is really important and time for us to be specific about what our needs are and how we accomplish them, thank you for that. i don't know what time it is in europe but appreciate you communicating with us here. we now turn to tim archer. i'm glad our panelists are ceos and engineers, gives us a chance to dig deep on some of the science we are trying to get right which is part of the mission of useca. particularly the translational side. to translate the science faster. so tim archer, your company can't just build fast, we need the equipment and tools that do the work that help us keep our cutting edge, to bring together physics, you are a physicist, and other fields but we need to be leading-edge in the united states manufacturing so we look forward to hearing your view on this part of the infrastructure

that we need. thank you for being here. >> thank you for the opportunity to appear before you today. i am tim archer, we are one of the world's largest semiconductor equipment manufacturers. the research makes the machines that make the chips. in california, we have 16,000 employees worldwide. we are a world leader developing state-of-the-art manufacturing equip and that brings together the first disciplines like plasma physics, materials science, advanced robotics and artificial intelligence to create nanoscale semiconductor fabrications. complex machines enable companies like intel and micron to produce sophisticated integrated chips in high-volume. i would like to thank you and others in congress for the vision you have shown towards

addressing challenges and opportunities facing the semiconductor industry. recent events like the chip shortage have put a spotlight on the challenges but i would like to stress us leadership in semiconductor manufacturing technology is strong. competitiveness is rooted in innovation, drive and resourcefulness of american companies. i'm proud of the role our employees have played for four decades in setting the pace for innovation and maintaining leadership in the global market. semiconductors form the foundation of smarter, faster and more connected digital world. it is vital to create a secure was so -- resilient supply of semiconductors and accelerating an ovation ahead of the rapidly evolving technological complexity. congress recognizes supply and

innovation is taking bold steps to strengthen semiconductor through the chips act which will fortify our supply chain the workforce, domestic resource development. this partnership with industry and government will contribute to us leadership in semiconductor technology well into the future. as you continue to work on these efforts we will highlight three areas that benefit your continued consideration. first, and all ecosystem approach, the chip shortage we are experiencing highlights complex and interdependent nature of semiconductor ecosystem and the need for sustained investments throughout the supply chain. this is increased our workforce in the united states, 45% in the past two years adding 3,500 jobs including high-paying engineering and advanced manufacturing facilities in california, oregon and ohio.

we also rely on hundreds of american suppliers many of whom are struggling to keep up with the rapid pace while lingering on the final effects of the pandemic and a tight labor market. we are grateful policymakers recognize these challenges and will support the industry comprehensively for the commerce department's grant program to establish the chips act and important r&d programs like investment tax credit. we urge congress to act quickly to pass these measures. leveraging these, partnerships with academia and national labs, critical to any collaborative innovation strategy. plasma research is key in the

future of semiconductor developments. legislative proposals like microelectronics, research, energy innovation act, a move forward, and deploy federal resources including national labs to sustain these partnerships. there is an outstanding opportunity, with industry, government, academia and national labs in centralized and collaborative space. the establishment of the national semiconductor center provides a new pathway to sustaining us technology leadership by creating opportunities to explore new ideas and quickly transition breakthrough technologies, in closing we believe it is vital to prioritize competitiveness, collaboration and supply chain and us leadership with global

industry. >> thank you for that. i love the collaboration. collaboration is the next form of innovation. you collaborate to get it implemented, you don't have it. around here we have to be more collaborative. the first round of questions for colleagues who might be joining us, then to jump in later with my questions. >> feel free to jump in. we are teammates in this. america share global semi conductor manufacturing is 12% today.

let's summarize what we've learned? we have to press the button. the largest portion is in asia, to taiwan, korea, china, japan. 80%, 9% to europe and 12% in the us. >> 40% to 12% today. and semi conductors in asian locations? >> two affects. they pursue this industry with strong policies and high incentives. >> provided by governments. >> what do they do in taiwan

and china? >> incentives could be as much as 70% for some of the capital incentives in china so strong capital incentives available, those countries recently announced major expansions, korea announced $100 billion capital incentive programs for their semiconductor industry. >> that is one factor, government incentives. >> many lower end supply chains were in asia. at the consolidation of the supply chain so it is a more efficient overall supply chain. >> for example? >> power supplies. around the supply chain, the

more efficient supply chains focus on cost. not on resilience. we believe we need a globally balanced resilient supply chain, what we are suggesting in the chips act is rebalancing 50% gap we spoke about. allowing it to be competitive to compete for the global market. labor costs are a factor but it is primarily capital cost, the largest portion of depreciation of capital cost dominates the overall cost, labor costs on those areas of the supply chain. >> you want to add anything to this line of questioning? >> i would just add, 2%, 98% of

semiconductor manufacturing, for the very reason over the last 20 years they supported semiconductor industry on shore in countries outlined earlier as well and they are being produced by micron, and leading-edge, 35 to 45% cost difference that exists for manufacturing in asia to build the leading edge fair, that gap is overcome through investment tax credits to bring more manufacturing on shore.

long-term resilient operations and memory to present six -- 60% of the correction and semiconductors. along with the rest of the semiconductor ecosystem advancement. with economic prosperity and national security. >> it is fair to say governments in these locations made the decision to spend government funds to incentivize the production of chips in their jurisdictions. >> if we are going to get them back, with grants loans and tax

incentives to incentivize them in the united states. >> what we've seen recently the world recognizing the criticality of the semi conductor industry. very recently for further incentivize these industries on their source the car criticality and urgency denied before us. >> to take some leeway to ask preston feight, are we ready in the united states with a workforce trained well enough to get the global percentage back from 12% to wear it ought to be and what we need to do in

that regard. >> our experience, we have an amazing workforce, great people in all our a location that have high skills in silicon valley offices in mississippi so we have great workforce but training is needed, specific skills for these industries. >> i believe there is a partnership with east mississippi community college and mississippi state university that is helpful at your columbus facility. >> very correct. with universities, to develop people and put them in great careers and jobs. >> more questions.

>> only 12%, primarily because other countries have provided industrial policy, and incentives for industry to move overseas. did you ever consider as you were moving this manufacturing overseas, the risk to your own industry not to mention national security? >> i am very proud to say intel has remained on us soil over this time and far fast majority of investments are in us and european soil with a very small amount in asia. what happened is the rest of the industry moved over this time largely responding to

these incentives for we've described, over half land on us soil with approximately 1/3 in europe. we are one of the few that remained dedicated to us, r&d and manufacturing investments over the entirety of our 53 year history. this clearly affected the rest of the industry in a most dramatic way. >> how much of that 12% is it? >> about half. >> this should be unfair trade practices, putting it at a competitive advantage because of government subsidies. you can slap tariffs on that and try to start your own industrial policy in the united states which is the path worth taken. does that some things up?

>> we emphasize without such actions we see foreign countries are taking aggressive steps and they understand the criticality of semiconductors under laying every aspect of the digital future and that is why we speak with such urgency on this topic to be restored on american soil. this is foundational to every industry and aspect and we believe it is justified to take such steps and we would say this industry that was born in the united states, this is our industry that underscores every aspect of humanity going forward. now is the plan for action. >> when the government starts attempting to out locate capital it screws things up, doesn't do it very effectively. as opposed to pushing unfair

trade practice route to join in, let's engage in the same activity, the misallocation of capital. are you concerned about that? >> given what we've seen worldwide a 30 year trend is dramatic. these are not overnight actions taken by foreign nations, there are concerns on how it was out located, without such steps our industry will be further undermined, we will lose credit en masse in the future and never have the opportunity to restore this industry on american soil. >> give me the macro numbers. how many dollars of capital are provided in unfair trade practices by overseas competitors kick you how many hundreds of billions of dollars? >> in the last year we've seen

european suggest $40 billion, the koreans suggest one hundred billion dollars, the chinese suggest one hundred billion dollars, these are stiff investments. what we are seeking is to unleash public, leveraged investments where these investments would unleash $3 to $4 for every dollar put into as well as research investments are long-term, industry was born out of these investments decades ago, near-term reversal in the manufacturing footprint that is most critical to the world. >> there's 20 of capital available. >> it is not like we are short capital. it is just that there is unfair trade practices engaged by other countries. >> others have seen the criticality of this industry and invested for so many other aspects of the technology industry. that is why they have chosen to

take such practices aggressively and we see such action needs to be taken in the us to restore this industry. now is the time to act. >> it is almost mutually assured destruction, a race to the bottom. i am a badge free trader. i don't like tariffs but almost hate making our location capital worse. >> as we think about tariffs and other export policies, they are further hurting american industry because other countries are not putting such limitations and practices in place in their industry. to say it is not helping our industry but hurting it instead, this very odd logic. we need to take steps to restore american competitiveness, to improve trading and export practices globally and to do that, partnering with our friends globally is critical as well. the industry may never be back on american shores.

>> i am aware tariffs heard american consumers but i'm concerned about engaging this race to the bottom in terms of governments across the world doing the capital investment. that long-term is not a good solution. >> i will go next to senator wicker to make a quick comment. >> in response to a question to senator johnson, when was the significant darpa investment early on and to what extent do governments supply funds to get it started? >> many of the original elements of the semi conductor industry date back to the earliest days of darpa. that was 50 or 60 years ago that produce many technologies that the internet, semi

conductors, ai runs on today. these are long-term research investments. that's why we see things like the and ftc portion of the chips act, a cortical aspect, not just worried about the next decade of this industry but decades of this industry into the future. >> this will be the last. do you know if transpacific partnership would have addressed these problems? >> i'm a big believer in the tpp. that would be key be good policy to work closely with our european allies and our asian allies, these are countries that want to work with us and as i mentioned in my oral testimony many of these countries together represent almost all the semiconductor technology and equipment in the world aligning with partners in tpp and the technology trade collaboration that has been initiated in the us and europe.

we view these policies as positive ones we fully support. >> maybe the witness could supplement specifically about the tpp addressed subsidy of other governments in answer to the inquiry of senator johnson. >> i will take my route and we have other members who are waiting and hopefully we will get to them and if people want to second round, as long as people want to be, i want to say we had the same debate when talking about what happened with covid and the airlines and issue a report the government made and made quickly is going to pay for the government back into the investment so the covid pandemic and we have to make decisions about whether to keep the workforce running and the us approach to that worked.

so here, all of you have touched on it in so many ways, it is about future investment. that's why this is about the advancement of next generation chips. it is about how does the united states keep its leadership? as you noted we've gone from 36% down to 12 and the question remains if we do nothing, where are we going to go? i believe in ecosystems, the manufacturing supply chains that exist for automotive and aviation, i want the manufacturing supply chain and ecosystem to exist on something as essential as chip technology given the information that you could say is the ultimate supply chain if you will. on this graph, the amount of us leadership continue to fall off as we go to the next generation chips.

it is not just how many chips are produced, whether you can produce chips that were the last generation of chips, it is about producing the next generation of chips with higher intelligence. that is why i like pat gelsinger's detailed testimony about all the advancements intel is making. the partnership with european company asm l and mr. archer talking about this as relates to plasma. you are the ultimate story of translational science that we are trying to capture. we are trying to tell our friends and people in america that we've done a lot of basic research and advanced research but china is spending 80% of

their dollars on commercialization so this is about whether we take the next generation of technology to deploy faster and remain on the leading edge and if we don't, all that manufacturing is going to go somewhere else, not in the united states and as we see, americans woke up and understand intuitively what supply chain is about. they don't get their products. if you tell him that the ultimate product of the supply chain chips is all now leading edge in taiwan, basically sitting here with a big vulnerability of the united states. what is it that we need to keep doing.

and all these advancements, and talking about more translation. and what it means, what it means to the products, can you give us what kind of -- what are we talking about as far as advancements of chip capability. .. introduced in 1989, and this chip at 1.2 million transistors on it, the most advanced server

chip i just put into your hands here samples is on intel seven, which is your chart is now out of date. we are in production of our seven-nanometer projects. this is just mind-boggling the progress that's been made. as we think about application usages like an autonomous vehicles, the most advanced ai applications, vision detection and being predictive on management of driving, the most advanced mrna sequencing capabilities, speech recognition capabilities, the ai applications across numerous industries, five and 60 connectivity. all of these depend on the most advanced technologies available. they need the highest high-perfe computing at the lowest power capabilities to process these most advanced algorithms. we predict that by the end of

the decade we will have our first trillion transistor chip, right, and those kind of capabilities are for many of the immersive experiences of the future that will define the future competitors of industries globally. >> mr. feith, what do you need from them? what do you need them to keep doing as relates to next-generation technology for your trucks and inefficiencies? >> sure. i think he spoke well on the high technology and of some of the needs we have for vehicles that are fully electric or zero emissions using hydrogen fuel cells are a torrent of visual graphics are so important, machine learning so important but we also, the agriculture, the automotive, the truck industries need some kind of our call it more standard chips that keep affordability at the right level of performance at the right level to make all the cars trucks and tractors we need in this country. they shouldn't be left behind in

the thinking, can't have a life cycle of two to three years, otherwise the cost of products will go up incredibly to redesign cars trucks medical equipment that quickly. so it's kind of both. >> my time is expired but i think, if mr. thune, if senator thune is available that i think it is senator moran. >> thank you, chairman thank you ranking member and are witnesses today for joining us. according to a report issued by the semiconductor industry association, less than 5% of of the global manufacturing share for packaging, assembly and testing is done onshore, onshore of the united states. we have companies in kansas and across the united states that are well-positioned, i know are well-positioned to increase the capacity alongside chip fabricators like intel and micron to address shortage issues for the automotive and other industries. i would ask all three of you,

can you comment on importance of having the chip at investment address post-fabrication or downstream part of the semiconductor supply chain to reduce the supply chain and security vulnerabilities? >> overall, the indications are exactly as you say. the package assembly test which is generally more dependent on low labor cost, has even drifted more aggressively to asia. we believe it's critical to restore the integrity of the entire supply chain including advanced packaging assembly test on america or at a minimum in north america. pieces of the chips act specifically are designed in this area of advanced packaging capabilities. our objective would be an entire reshoring of the complete supply chain natalie including package assembly test but also many of the subcomponents key minerals et cetera all being brought back to u.s. soil. we believe we need a

geographically balanced resilient supply chain for the future starting with the most important thing but it must also comprehend the entire supply chain. >> anyone have anything to add to that? >> yes, i would add that of course leading-edge investment, investment in leading edge technology are the most important, tremendously important to innovate and differentiate and to really open up new applications. of course these should be a leading edge of vehicle manufacturing as part of chips act as well as investment tax credit both are essential to ensure america's leadership in semiconductor r&d and manufacturing but certainly aspects of advanced packaging should also be emphasized as part of the overall developer. i want to highlight here that why he investment in leading edge technology is so important. if you go back to the earlier question regarding importance of addressing technology, let me

take you back to early 1990s when technology was taken from the lab into high commercial production. since then the cost has come down of technology, advancement of technology by more than 10 million times. this is what is unleashed tremendous innovation that memory is being used in data centers, to smart phones, pcs, to consumer devices, two electric vehicles in future and to continue to unleash innovation come to continue to provide what technology is has delivered and how it has become the backbone leading-edge technology is really, really important. and as part of that leading-edge memory which is what micron as the only company in the u.s. developing and manufacturing semiconductor memory here in u.s., it's really important to emphasize this piece as we go forward to bring more leading-edge memory technology onshore. these investments with the

support from the government and chips and investment acts not only support the companies and bringing manufacturing onshore, they create tens of thousands of jobs, hundreds of thousands of jobs over a a predetermined s. >> achy. i'm going to try to get a second question in. i heard before had to leave a moment, i heard the importance of research. what is, where is the funding sources, federal funding sources that seem to be either available or missing? what the natural kind of opportunity we have to support research in the united states to keep the technology in its latest advancements? >> generally, the research efforts are across our academic communities, largely national science foundation and darpa have been two sources assisting government partnerships. we've seen the role of governments funding research to drop dramatically, right? into the semiconductor industry

over the last several decades, and really that was the seed corn per my earlier testimony, that's enable this industry to emerge. so we believe that those research of dollars need to e those long-term material science chemistry creating the future done largely to the academic institutions, , the establishmet of the national semiconductor technology center in the chips act as well as the advanced packaging technologies are just great venues to reestablish the kind of focus for the future. something that's well-established in foreign efforts, we see those in europe, in asia, and we lost the focus in his. >> mr. gelsinger i met appropriate for darpa, and appropriate or for nsf, lead republican. these issues matter to me and just an opportunity for you and others and we've increased the funding for research where is being spent is not necessary determined by us but by those

agencies but it is opportunities i can be of help that her subcommittee can be of help to attract the attention necessary to the importance of research in this field, please reach out to me. >> i would cherish the opportunity to spend more time with you on the topic. >> thank you. >> senator markey. >> thank you, madam chair. as we consider the $52 billion in taxpayers money to subsidize the chip manufacturers, we can't ignore the environmental impact of this manufacturing. we need to obviously have a plan in order to deal with all of those issues so that we are in shoring that we reduce greenhouse gases, that we reduce carbon in the atmosphere. so my question would be, i know

that lam research has committed to carbon neutrality by 2050. that's an important step, but it's not enough. you must get to net zero across all greenhouse gas emissions. and to the other witnesses, will you commit that your companies will reach net zero by 2050? mr. gelsinger. >> we will be shortly describing a a detailed plan to accomplish net zero by 2040 and we are laying at a more aggressive plan to be our 100 100 in 2030, o by 2040. we've also been widely reckon a -- >> is that all greenhouse gases? >> yes. and we've also been widely recognized company for leadership work in areas like water reclamation, minimizing hazardous gas and chemicals as well as our overall efforts in

sustainability. something we received numerous awards for in a in a yearlo for many decades. >> great. next. >> micron has a strong program and emphasis -- >> will you make that commitment? what you make a commitment to reduce data zero greenhouse gas emissions by -- >> in the long-term we actually -- >> the long-term is what you're. >> as . >> was with a program in place regarding investment -- >> which year? >> we will soon be announcing that. we have not yet laid out the year but we're making strong progress with respect to greenhouse gas reduction, waste management, water recycling as well as renewable energy uses. >> which is admirable but we need dates. we need commitments, and if speed is we absolutely -- >> we expect you to make the same promises. i want to say that you and we will hold you to and you will hear from us if you don't do

that. we can do both at the same time. we can compete on the one hand, and also show the rest of the world that you can reduce greenhouse gases. >> senator markey i just want them to produce enough chips we can electrify all our transportation sector right now is what i would hope but i do agree, have goals added. >> they should be the model. we can't expect the rest of the economy to be efficient if the industry that provides the technology to make us sufficient cannot do it. they should be able to square that up in terms of their own corporate agenda. and on to water usage, the production of semiconductors requires millions of gallons of water per day. semiconductor companies water usage is skyrocketing. intel and micron both use approximately 14,000,000,000 gallons of water in 2020. chip manufacturers must work to restore water to their local water systems so they are replacing the water they use with an equal amount of clean

water. i want to acknowledge intel for pledging to be net positive on water usage by 2030. mr. mehrotra, can you make the same commitment? >> we actually in boise, idaho, have program in place with 75% reduction in water improvement. that's 75%. and we have absolute programs in place. and i wanted to also highlight to you that we've made commitment to be investing over $1 billion over five five n years and programs related to sustainable operations. again, related to all aspects including water. water recycling -- >> and you commit to being net positive on water usage by 2030? >> so we again have timelines outlined in our report that we publish on an annual basis, and with absolutely continue to make improvements in these areas. >> well, there's an old saying

to those, too much is given, much is expected. a lot is going to be given to the industry by the congress and we have high expectations for you to be the model so we'll be looking very closely at the commitments that you're making because it is critical that we solve the supply chain problems that are increasing prices and harming consumers but we have to do it simultaneously while solving the climate crisis and ensuring that the environment is not collateral damage or just something that's an afterthought. that's historically been the case so we just want to let you know that -- >> senator, and want to highlight this is a priority for us. we publish a sustainability report on an annual basis here are milestones and goals are outlined there and you will hear more about this in terms of big goals coming from us and higher ambitious targets in this regard soon. >> the sooner the better and the higher the better. so we look -- >> we are aligned on his go.

>> thank you senator markey. senator scott. >> for so want to thank chair candle for hosting this abortive. aborted. i want to thank each of you for being here. my background is i ran copies, i start a company from scratch so i learn pretty early if you do get a return on investment you didn't do very well. also as a businessperson you try to look at what's going on around the world and one thing i would be focus on today if i did business in common with china is look at what's happening in russia right now with the american public is furious with what's going on with ukraine. we are expected american companies to stop doing business with russia. so if i'm doing business with communist china today i would be concern the same thing will happen with communist china decides to invade taiwan. so first mr. gelsinger i want to talk about intel. the company is clearly doing well one of the top ten most profitable companies in america. the world's second-largest semiconductor producer and last year you made $20 billion in income with the 25% profit

margin. everybody in business in the world would be proud of that. those are great numbers. you invested $25 billion across from your company last year including some chipmaking expansion. thank you for your expansion. we should've been in florida put your expansion in arizona and ohio so on a business guide, i like the the fact people are investing. when speaking about billions of intel's new investments last year you said quote, it does not depend on a penny of government support or state support or any other investments to make it successful. we're making this commitments without any commitments e governments to assimilate them, unquote. you've completely change your tune recently. you are also quoted as saying let's not waste this crisis in regards to receiving taxpayer handouts. which should scare all of us. this is on top of your company apologizing to communist china for the sanctions on the

xinjiang region where the chinese, is committing genocide on the weaker people. look, i'm a business guy. i've heard countless pages for capital. here's my question for you. number one, i feel like we are fiduciaries for the american taxpayer. they give us the dollars, the want to make sure those dollars are spent well. so tell me how, if we put this all the money in and my understanding is your company will get $4 billion, we put this all come all this money in. how does the american tax to get a a return? on top of this why wouldn't you as a ceo of a company to a significant business in china be scared to death of what's going on now with whether it's the uighurs, stealing the basic rights of hong kong citizens, harvesting organs of prisoners, then you watch what's happened in russia point and american public is going to be serious with a company that still does business with communist china if they continue to do those atrocities and then invest in taiwan? so give me your pitch about why

as american taxpayer we get a return and two why your company isn't putting more money into america and other allies to get away from communist china? >> thank you, senator scott, for those thoughts. first, i want to emphasize that we're we are putting our chips on the table. i have lowered our profitability by 600 basis points this year. i made of the company free cash flow negative for the first time in three decades. i've doubled our capital investments, all to the howls of wall street. we are investing heavily in rebuilding intel, but american leadership in this critical industry. i want to go bigger and faster. that's what the chips act will enable us to do, go bigger and faster and -- >> let's go to the return for taxpayer. we are all fiduciaries for taxpayers. i'm glad intel is doing this. sounds like it'll would be a great investment for intel, getting a bunch of federal money. money.

tell me how i get a return for american taxpayer. >> these are extraordinary industries that are leveraged across every other industry. every job we create creates on average greater than ten other jobs. the work we've done in arizona and oregon and senator wyden -- >> excuse me. you have a report that shows me that think about, i'm a fiduciary of taxpayers so you're saying it's going to create ten more jobs for every -- >> on average it's been well publicized in our sights in oregon and arizona, it's what was put forward for the investments around ohio. these are incredibly leveraged -- >> how does it turn into cash for the american taxpayer? >> creating jobs across the supply chain in manufacturing, and construction. our ohio site is creating 3000 new jobs, 7000 new construction jobs -- >> how much money does he american taxpayer get what you are asking for $4 billion for your company. what returned as american taxpayer get for that? so you invest these dollars. you're going to make money. i assume it will not do it if

you don't make money. how does the american taxpayer get return? >> these jobs would drift to other areas. we want them on american soil. they create jobs that are taxpaying jobs and were happy to go into more detail with you, senator scott come on all reports and data we have done but these are seen as some of the most lucrative job creation tax producing industry and community creating jobs in america. >> so i'm a ceo. i ran company. we had to get a return. we had to fairbanks back, we had to get return for shareholders. as governor we could probably a thousand economic deals. i got an average ten times my money back. so it sounds really nice but i've never seen one report this as i will ever get a dime back if you get $4 billion. >> i think where to move to our next witness, but but i just the written testimony, so i guess you could say that is the submission to congress and intel's written testimony.

california annual economic impact from intel is 24.9 billion. oregon is 19.3 billion in annual impact. arizona is 8.6 billion in annual impact. so new mexico is 1.2 billion in annual impact. texas doesn't have the exact number there. in massachusetts -- so i think the issue is 52 billion from us and we have a long way to go in this process, but i think you are going to see that it is about building that ecosystem and did you think you'll see annual revenues that will come i think the clarification to mr. gelsinger statement was there going to ohio to matter what and building if the question is, could expedite and build more? if the chips passes they are likely acceleration. so anyway, senator klobuchar. >> very good. thank you very much, chair

cantwell and thank you for holding this hearing. thank you to all of you. it's a nice break from judiciary honestly. it's just a little thing going on any other hearing room. i wanted to start with you, mr. gelsinger, and mr. archer, on the subject of workforce shortage. i've obsessed with this. my state has a really low unemployment rate which is a great problem to have but, and we have 18 fortune 500 500 companies, some in that range, and i believe the answers are brought. the answers are of course immigration reform, lifting visa caps, workforce permits but also apprenticeships and one into your degrees. senator moran and i have a bill which was included actually in the americas competes act over in the house which would allow workers to earn college credit for completed apprenticeship creating a pathway for workers to gain skills.

can you talk to the role public-private sector working together on this angle of workforce shortages? >> we are extremely proud to be partnering and the fact that just last week we announced $100 million order ship with nsf for job creation primarily in the midwest around our ohio site announcement. this builds on a a long histof public-private partnership and job creation. we are making strong investments in areas like underrepresented minorities and females in technology, strong investment in stem. i personally am a product of the college community. a farm boy whose legal one of most iconic compass in american history. i deeply believe in these principles. we've also seen, we launched our ai for the future program aimed at community colleges. many of our workforce are hired with no or minimal technology education and we provide that in partnership with me of the local

community colleges as well. this is core to our future. >> okay, thank you. my dad went to commute the college as did my sister, so thank you. mr. arce, quickly because of another question, thank you. >> i think as mr. gelsinger said it's important to the industry. we think about chip shortage and many of the bottlenecks to recovering from this. one of them is the tight labor market we face today, not only companies like lam research but also the hundreds of american suppliers that we depend on. those suppliers are spread across 37 different states and their feeling the pain of not enough workers to build fill these high skilled jobs that wherever supportive of any type of government program that helps to bolster spirits and immigration reform. >> of course that is important to us in california as well. >> exactly. mr. mehrotra, i know micron employs 110 people in minnesota, who designed chips. thank you for that.

not who's counting, but i am. i also visited sky water in bloomington minnesota. in fact, the president at one point held up one of our minnesota chips which produces 65 and 90 nm chips or can you talk about the importance of investing in u.s.-based companies in the production of semiconductors and innovation? [inaudible] >> say that again in the microphone. >> i just want to say again that we are very proud of our team in minnesota. we are absolutely leading edge working on some of the most advanced work that my son is doing. in micron today, in leading the world in semiconductor memory. it's really imperative as part of microns announcement of investing, more than

$150 billion over a decade in leading and semiconductor manufacturing and r&d, that we have the fortune to bring manufacturing, leading edge manufacturer on shore. of course we are here in virginia. manufacturing with nearly 2000 team members and investing in advanced memory manufacturing and storage, and supplying the market such as automotive market, defense and industrial. but we need to bring more manufacturing into the u.s., and micron is committed to doing get. with support from chips act and investment. as the only company in the u.s. making semiconductor memory we fully recognize our responsibility and we seek the support from the government policies to enable us to be able to be part of building resilient semiconductor leadership here in the u.s. >> thank you. and i will just put on the record a question about senator

thune and my shipping reform act. i think it's really important if were going to make stuff and invent things and export to the rest of the world that you're able to ship to the rest of the world which means not having empty containers and having reasonable rates. so we're excited under senator cantwell and senator wicker leadership that the bill was marked up and unanimously got to this committee just a few days ago and is headed to the senate floor. so thank you very much, all of you. >> thank you. senator thune, i'll go on to you. >> thank you, madam chair. for holding this hearing it and let me just start by saying that united states remains the world leader in technology innovation. we feed the nation's economic dynamism and benefit the lives of americans and people across the world. it is essential that we ensure our supply chain continues to innovate as well providing them

with the agility agendao advances in technology or disruptive events like the covid-19 pandemic or russia's war in ukraine, which is why i've marked in a bipartisan manner as senator klobuchar mentioned with her and senator wicker on ledges or solutions like the ocean shipping reform act and the freight act ge's current strains and to bolster a global competitiveness of u.s. products and industries. the effects of the semiconductor shortage highlights importance of supply chain perhaps most notably in nations auto industry which produces more than 11 million vehicles annually. the transformation to automated vehicles is going to place a much greater demand on semiconductors and other crucial products so it's crucial that the united states should remain globally competitive. a diesel radically transform the way americans move, especially true for the elderly -- evs -- person who are elderly and will

greatly reduce the average of more than 40,000 traffic fatalities on our nation drug waste each year. while american companies currently the world -- [inaudible] and allowing china to seize the innovations unacceptable and the u.s. must act boldly to maintain its position. the u.s. regulatory framework and our supply chains must catch up with private-sector innovation in order for these technologies to advance. there are tens of thousands of good-paying jobs and billions of dollars of investment that are at stake which is why my colleague senator peters and i worked together to develop and enact legislation, , a crucial component and maintain this industry. we can transform the way americans move and the us must once lead the world in this revolution. mr. feight, a new test when you

mentioned your working toward the development of autonomous and connected vehicles. beyond bolstering u.s. technological combativeness through investment and supply chains and domestic industries, what do you believe congress or the department transportation can do to encourage the testing and the part of av's? >> first of all, senator thune thank you for the comments. the opportunity is of what av's can bring to our country and will any think it's nice we're in america the leader of the technology and we're partnering with leaders of technology in the world and our development efforts. i think what really need is a clear vision of what will be allowed from alleges that standpoint and will need to clarify what judicial requirements will be in terms of liabilities as we move forward. right now the industry is in a good spot in developing autonomy and were moving it forward. needs to be done safely. that's most important thing. safety has to be the most critical factor and will

continue to focus that way and will develop capability over time when it is safe in certain corridors and those need to be clearly identified and do we need to have a big general knowledge sharing between government and industry on how we make sure we roll this out in an effective way. i think it's a dynamic conversation that were happy to engage with on an ongoing basis. >> tanks. mr. gelsinger, , given intel's work in a space you have anything to add in promoting av's? >> clearly this is an area that the world is moving rapidly it e find some of the regulatory policies and other parts of the role of more favorable now and some of those nations are moving it more rapidly. so we do believe this is an area that requires much more active positioning our mobile identity is one of the clearly does in the world in this area, , and right now we're seeing far more progress in other portions of the world in deploying av

vehicles for both commercial as well as consumer fleet. much of the technology is developed here but the deployment is being let at other places in the world. timed act. this is urgent if we want to stay had. i would also emphasize that av is one of the most advanced uses of ai capabilities requiring the most advanced semiconductor technologies as well. so it reinforces the heart of this hearing today. we need the most advanced semiconductors. today the auto is about 4% semiconductors. it's estimated to be 20% semiconductors, 5x increased by the end of the decade so the dependency and semiconductors for these advanced areas like av is essential for the auto and trucking and transportation industry of the future. >> thank you. thank you my time has expired. i've got a question on 5g that i will submit for the record. thank you. >> thank you, senator thune. i saw senator tester earlier. he would be next if he is available.

if not we will go to senator baldwin. senator baldwin. >> thank you, madam chair. and like my colleague, senator klobuchar, i been jumping between committees so it looks like i missed show and tell at the beginning, but i'll wait until after the hearing to catch up on that. i also want to chime in along with my colleagues about restoring american leadership in semiconductor manufacturing that wisconsin would make an ideal location for some of that expansion. just planting the seed. as we are well aware, right now congress is on the brink of putting together a conference committee to advance the variously named competition

bill. and i hope that we will do our jobs without delay. but during the debate over the chips act, many pointed out the generous incentives provided by foreign governments to domestic manufacturers. however, you have noted that different spending priorities of foreign competitors. particularly on the issue of stock buybacks. for example, over the last 20 years, looking at that time horizon, intel spent about 64% of its net income on buybacks, a whopping 127 billion, while sampson spent only 10% and taiwan semiconductor spent 2%. so as the support of the chips act i want to ensure that the federal government gets proper return on its investment, namely, an increase in the domestic semiconductor

manufacturing base. as such i would like to ask each of the semiconductor manufacturer witnesses to briefly describe your spending plans for the next few years, and explain how you envision chips funding potentially fitting into them. and if i could start with intel, mr. gelsinger. >> thank you. i came to the role of ceo slightly over a year ago. i i ceased our buyback policy community upon my arrival. i laid out to wall street are radical increase in our capital expenditures, more than doubling them, taking the free cash flow of income negative for the first time in over three decades, reducing our profitability by 600 basis points, more than doubling our long-term capital investments and indicating to the street that i expected to see that level only increase for the rest of the decade.

this is a largest capital buildout probably done by any company in any industry in history. the majority of that will land on american soil that i do not believe that's enough and i can't do it myself. the chips act is intended from my perspective to enable me to go bigger and faster than the bold commitments we've already made that have reached very negative response from wall street. we want to do more and faster. this is all about restoring u.s. competitive, bringing back this mantle from asia on a critical industry not only for our economy but also our national security. we are all in. >> thank you. mr. mehrotra. >> senator baldwin, as a highlighted earlier, micron is only company in the u.s. that manufactures semiconductor memory and storage. in semiconductor memory and storage presents nearly 60% of the worldwide production and we're the only company here

manufacturing and developing leading edge technologies. today we are the global leader in technology -- ahead of all the global competitors in developing that technology and putting it into production. we have done so by making billions and billions and tens of billions, more than that, investment over the last few years in leading edge r&d and investment in manufacturing. we always prioritize our investments in r&d and manufacturing to be able to secure leadership for micron in semiconductor memory technology, and to be able to meet the growing needs in this world of data economy for more data solutions which we make memory and storage solutions. so that will always be our highest priority. as part of that we have announced over the decade we will be investing more than

$150 billion in leading edge r&d and manufacturing. so that is the priority to continue to drive innovation, to contend that in r&d, to continue to support the manufacturing. that's our plan and that's our focus. mr. archer. >> yes. so senator baldwin, we manufacture machines that used to make the chips, and so our priorities for the future of the same as been for the last couple of years which is to expand our capacity nearly 70% of our manufacturing capacity is in the u.s., spend about 90% of our r&d in the u.s. last year was $1.5 billion. our priorities for the few charges to continue to invest to accelerate innovation in support of the domestic and global semi conductor manufacturing industry in order to try to alleviate many of the global shortages seen in chips that are affecting some a different industries. so we are going to continue to invest to maintain our leadership in the space.

>> thank you, senator baldwin. senator warnock. >> thank you so very much, madam chairman. whenever i'm back in georgia i hear about the rising costs for families, and a deeply alarmed by how the global semiconductor shortage is been many of those rising costs and automobile industry. leasing cost increase for new cars by 11%, 37% for used cars. almost everything relies on semiconductors, not just cars but cell phones, washing machines, which means that due to this chip shortage, families have faced sharp increases in the cost of computers and cell phones which they need for work and school, and many other products. mr. gelsinger, yes or no. do you agree the semiconductor shortage has likely contributed at least in part to higher prices of things that families rely on like cars, computers and washing machines?

>> yes, yes, i agree. >> in fact, rising costs don't just hurt car buyers. thousands of workers like those at the kia plant at west point, georgia, which had to shut down a couple of times come have been affected by the shortage. and that's why last may i probably supported federal funds to increase domestic semiconductor production. i was proud to work with senator peters and on that issue when the u.s. innovation and competition act went through committee last may. and i supported it again when the house recently passed the america competes act legislatio legislation. mr. gelsinger, do you also agree that providing additional resources to the chips for america fund would help alleviate the semiconductor shortage? >> yes, i believe it would. it takes time to build new factories, , so the urgency associated with this is

critical, but unquestionably this will help to alleviate the shortages mostly in the medium and longer-term, but immediately helping is a very positive step. we've already wasted several quarters since the senate acted last year. now it's time for us to move forward rapidly. >> i agree. i think it's past time and that congressman immediately and pass this funding that the president needs to sign into law. now, related to this semiconductor issue, america of course needs and robust semiconductor workforce that reflects the diversity of the nation. as congress makes investments in domestic semiconductor manufacturing, we must make sure that we have the benefit of all our talent. we ensure that businesses are doing what they can to make semiconductor jobs more assessable, and attract partners from underrepresented communities. i'm a graduate of an hbcu.

i would argue the greatest of all, morehouse college. but i've long been a chicken for all our hbcus which he been punching way above their weight, doing so much for so long with very little resources. a proud to fought for $1.2 billion in funding in the recent competition package to support research capacity building at hbcus and msis, colluding for semiconductor related research. i also recently sent a letter with senator padilla supporting a provision in the america competes act that would create an office of opportunity and inclusion at the department of commerce to develop standards that will help expand opportunities in the semiconductor industry for traditionally underrepresented individuals. so i want to ask each of you, as industry leaders would an office of opportunity and inclusion

support the semiconductor industries efforts to attract more women, more people of color, and rural workers, and use this as essential to the work? mr. gelsinger? >> i would say whether we of the office or not we are deeply committed to these topics. we have been increasing our underrepresented minorities and our female workforce but wea goal to 40% females by 2030. heart of my selection of ohio, right, and our recent education initiatives that we just announced last week of $100 million investment were specifically because of increasing our minority and female workforce. we would love to discuss this topic with you more deeply. >> do you think having an office might encourage other similarly positioned to take a similar commitment? >> we look forward to the conversation with you. >> mr. mehrotra, i'm sorry i

hope i didn't butcher your name. >> no, , you didn't, thank you. senator, we're well aware of your and senator padilla letter regarding office of inclusion in the commerce department. i would like to highlight that micron has been a strong proponent. it's a core value of micron to promote greater diversity and to increase the presentation of minorities within micron. we publish a diversity and inclusion report. we call it for all, every year, and this report highlights our key initiatives in terms of increasing the presentation across all diverse groups, in terms of pay equity not only in terms of gender pay equity but pay equity not only for salary but for bonuses and start for all underrepresented groups in the community, focus on engaging with minority-based suppliers as

well. so we have -- and putting our cash, investing it with those that represent minority institutions in terms of financial institutions. so with several initiatives. we report our progress. our values are very much aligned with promoting greater opportunity and occlusion and we continue to be strong supporters speeded you would support such an office and your pledging your own commitment to make sure that people of color and women are represented and provide access to employment opportunities. mr. archer? >> yes, lam research this is an important topic and, therefore, were supportive of any activities that can help us expand the workforce in the united states, including tapping into diverse work groups. one of the things were most proud of is we partner with organizations like the national gem consortium which is members many of which are the hbcus.

what we promote is trying to help students pursue advanced degrees, masters and phd in science and engineering so they can build meaningful and long-lasting careers in companies like ours and others throughout the semiconductor industry. >> i i look forward to working with industry leaders to increase semiconductor production and her own country and a we make good use of all of our talent. >> senator, i just want to say to you we recently opened a center in atlanta, georgia, and were engage with hbcus there as well. and the purpose of this design center that we opened their we will be recruiting 500 -- over the next two years as we again to tap into outstanding diverse talent that exist in the region. >> thank you so much. >> i don't see senator fischer or young. i know senator young said is coming back but we'll keep going on our side. senator peters.

>> well, thank you, church can't well, thank you for convening this incredibly important hearing and great to have the witnesses as well -- chair can't well. these semiconductor chips can be a small as a fingernail but we know these tiny devices have absolutely enormous impact across the economy and our society. and certainly a clear example is the outer industry come something i'm very close to as a senator representing the great state of michigan. i know before the 1970s, cars so we didn't have many chips. very few had a handful dealing with the engine functions to make that work a little smoother and then in a few years later cars relied on chips for just about everything, from safety devices to things like power windows instead of the crank their, there's a chip that allows us to do that. they are basically become ubiquitous and some cars or

vehicles now have over 1000 chips in them. in light of this, it's no surprise that abandoning contributed to a global chip shortage. when that happened it hurt auto production and autoworkers particularly hard. as with up to the future chips are going to play an even more important role in mobility as they are essential as a think was discussed earlier for both electric vehicles as well as autonomous vehicles which represents the future for the auto industry. that's why i'm excited to chair a hearing in detroit this coming monday and we're going to examine the role of semiconductors in the future of automotive innovation. i certainly believe it's essential we make our semiconductor supply chains as resilient as possible, not just efficient but highly resilient. and i think my state of michigan is particularly well-positioned to lead this effort. not only will this grow jobs and

economic activity in the semiconductor industry, it will also strengthen the entire economy especially when it comes to not just cars but all products sold that use these chips. so mr. mehrotra, as you know and as was mentioned cars are becoming increasingly electric and autonomous and michigan is certainly leading the way in the manufacture of these vehicles. automakers and michigan will require more and sophisticated semiconductor chips as move forward not just the legacy chips we have now. particularly when it comes to memory and to storage. indeed you describe vehicles earlier as future data center on wheels, which is basically clearly what they are now and will increasingly be. this is just one reason why i expect michigan will be significantly. we are a major manufacturing state, home to many other industries this either products more innovative from chips to medical devices to defense applications. michigan's future with the semiconductor industry is also

rooted in world-class universities and training programs which prepare workers for these roles as was discussed earlier from r&d to making cutting edge products. simply put, another plug for my state, michigan knows how to make things so it's no surprise we are seeing a major influx of investment around semiconductor technologies like kla operating at second headquarters in ann arbor, and without a doubt in my mind funding for the chips act will be critical for growing the sport. my question for you is, mr. mehrotra, can you discuss how micron's memory and storage technology will play a role in electric and autonomous cars in the future as well as all the other products we make and are manufacturing state? >> senator peters, thank you for your question and giving me the opportunity to highlight here that in semiconductor memory and storage micron has globally number one market share. so we have been strong partners to supplying to the automotive

industry globally and strong partners to the u.s. auto manufacturers, and during the pandemic with various supply suy chain semiconductor supply chain shortages we worked closely with automakers and make sure that our memory and storage solution did not cause any line down situation and we continued a strong provider of our solutions to them and will continue to maintain our number one market share leadership in this very important and fast-growing segment for the semiconductor industry. and we have earned this number one market share based on the high quality that micron is focused on delivering to this industry but also high quality that is focused on delivering solutions whether in data center or intelligent editor multitude of other devices that using more and more memory and storage. you are absolute right to point out that i often say that

autonomous vehicles are becoming data center on wheels. today, they have a roadmap that will be using more than $750 of semiconductor memory and storage content in these vehicles, more than 15 times higher than the standard vehicles of the past. so this is a tremendous opportunity, and micron's focus on leading edge technology is important. we are continuing to with automakers to help them transition to the new technology nodes faster because that increases the availability of memory supply, and in general building faster to leading edge nodes help increase availability of all semiconductors and avoid the kind of shortages and situations that have occurred in the past. so this is an important initiative, the partnership with the auto industry is aboard. and, of course, making investments here in the u.s. with the support of not only just the chips act but also with

investment tax credit, it's critically important, and micron is looking forward to having these legislation get across the finish line so that with a sense of urgency we can begin to play catch-up in terms of bringing leading-edge memory manufacturing onshore, and play catch-up with asia which is been investing for the last 20 years plus heavily with the government support in bringing their semiconductor manufacturing onshore. >> well, thank you. thank you for the answer. thank you, madam chair. >> senator rosen. >> thank you, madam chair, for holding this hearing at a want to say as as a former computr programmer when i started, those disk drives were called platters. they were giant. we have giant rooms had to be cooled and now -- [inaudible] it's amazing, is lighter, cooler, faster and more powerful. so thank you for bringing those.

i really want to talk about the semiconductor impact on broadband because they shortage has far-reaching consequences across sectors. particularly broadband is an essential part of our recommendations network, a a consumer, business equipment, our motives, routers, gateways, our devices can everything depend on the chips to mention come to control it come to collect our information, divert information can store it, whatever that is. the telecommunication industry has been sounded the alarm on shortage of deployment and i was a member of the group of 22 senators who helped draft the infrastructure bill including the state broadband grant program the middle mile deployment act, and i know these programs will provide critical funding to stay localities for reliable high-speed internet to the last mile, really our rural areas being -- rural areas in

nevada being adversely impacted. so mr. gelsinger, can you talk about the impact the semiconductor supply chain issues and shortages that it had on the telecommunications industry, and how are the current semiconductor supply chain delays how do you think they can impact the programs, the ones we just created with bipartisan infrastructure law? >> thank you. and first i would also point, want to point out just three years ago we were desperately fearful if we would've lost control of the technology associated with our 5g networks. today, technologies such as open ran or open radio access network are not opening up the 5g networks and effect dish, verizon, at&t, are all building goes on intel-based open ran platforms. we had solved this international crisis that faced us and a

technology lean forward with it also the time of covid has shown the criticality that we have on our broadband networks. literally overnight, right, every worker and every school child became an online student worker. it was tremendous and thus the effort to run building the broadband future are absolutely essential and we seen the productivity benefits that result as we have come roaring out of the covid economic challenges that said, the future still in front of us, and as we look to five, , 6g deployment of autonomous vehicles not just smart cities but also smart factories with areas like private ig and 6g, they depend on the most advanced semiconductor technologies. what we are laying out is literally the underlayment required to keep the u.s. competitive on the next-generation communications and broadband technologies. this is essential to every aspect of the innovations were

working on for the future, whether that's autonomous, whether that's private and consumers, whether that's factories and workers and literally to be the unquestioned leader of 6g and beyond this will be supported as a result of the chips act. >> well, i'm glad you mentioned this because we have a lot of sectors that depend on it so want to talk about moving on, mr. gelsinger, also about our tourism industry. because as the witnesses, as many people of asked about autonomous cars, just cars in general, a huge chip shortage, increased demand for rental cars as tourism goes back up. we know rental cars were sold off during the pandemic. new cars are not being made as quickly and, of course, the demand is for individuals to buy cars so it's really, really hurting tourist economy like las vegas. can you discuss the steps are

taken to ensure that chips are being manufactured and distributed to automakers in the matter that supports both industries critical to supporting tourism such as our car rental companies? and i would say buses and all those shuttle buses, fans, taxes, all the things that help our tourist economy in every state. >> as we've already indicated in this hearing so far, the importance of future technologies enables the cars of autonomous, connected, entertainment, all of those aspects of the near-term crisis has been driven more by over notes, areas that many of which has further emphasize the gaps that we have in our gross depended on asian suppliers. we've recently announced the acquisition of a company power semiconductors. that increases our ability to respond to these near-term challenges of the auto industry. our priorities and allocation of our chips have been to first the

manufactures semiconductor equipment, sucking, to the healthcare sector and third to the auto sector. we view this as a most critical sectors to rebuild our future and will continue to act in that way as a look to the future. >> thank you. i appreciate your comments. i yield back. >> thank you, senator rosen. senator young, you would be next if you want to go and then senator hickenlooper. apparently that is a yes. >> thank you, chairwoman. i appreciate, madam chair, you holding this timely hearing. it was nearly a year ago that this committee passed my endless frontier act, now known as u.s. innovation and competition act, and we did it with a bipartisan vote of 24-four out of this committee. the bill is vitally important to the future of our country. the national security imperative

to advancing this legislation to make sure we don't fall behind china as it relates to our tech innovation. this of course is historically a key driver of our economic growth, and our ability to defend our values, our way of life. american leadership and science and technology especially the emerging technologies that are going to dominate the 21st century will be key drivers of our economy and our competitiveness with communist china moving forward. .. >> for our economy is more resilient moving forward. as i understand it, this moment, the u.s. senate is

taking a vote to move us one step closer to ultimately passing usica or whatever we're calling the final work product and i really look forward to continuing to work with my colleagues to see this across the finish line. in order to drive u.s. semiconductor innovation, we mustn't only incentivize growth in the chip act, but imperative that we reduce our reliance on other countries throughout the entire supply chain. mr. gelsinger and mr. mehrotra, i'm sorry, i butchered your name there, i couldn't help, but notice in your written testimony neither of you mention china. i'm going to give you an opportunity to speak to a couple of questions. what is the current state of the semiconductor industry with regards to china and where do

you see the industry's future in china? >> mr. gelsinger? >> china has emphasized the part of this on chinese soil, the past two and a half decades and substantial progress in building up their semiconductor industry. however, given our export license control matters, they're significantly behind and their position is largely a older industries not leading technologies, where u.s. and european capabilities are still far more advanced and other asian countries are advanced and thus, we believe that such practices for the future are important to continue the leadership that we have to be very, very thoughtful about, you know, being able to sell products there so we're

maximizing the product revenue, but continuing to keep a sub standing technology leadership, you know, for our equipment suppliers as well as our chip suppliers to be able to have revenues there. it's the largest chip market in the world in china so we need to be able to participate to become the largest companies in the world, even as we be very careful to protect our intellectual property and leadership position. >> sure. mr. mehrotra, do you have anything to add, sir? >> i would just add that as china is one of the large markets, it's a large market not only to semiconductors, but global businesses there, and manufacturers, such as micron, supplying product to them in china as well. so, the china market does help provide scale, that's important for semiconductor industry, and the goals to investment and r & d. i would add as has been

highlighted here earlier as well, is that china certainly is recognizing the importance of semiconductors, certainly recognizes the importance of memory semiconductors which micron is the only company in the u.s. making those, and is investing more than 100 billion supporting their semiconductor industry and hence, it is extremely important that u.s. does play catchup with chips act and investment credit. timing is of the essence, other countries are moving forward and we need to catch up in this area to get a level playing field and as a part of level playing field, other aspects of free market access, fair trade policies, protection of intellectual property and these are all aspects that are clearly important. >> which is why we're advocating for this legislation. so thank you for affirming that, and lastly, maybe very briefly because my time is coming to an end.

but do any of our panelists have concerns with our reliance on other countries for the rare earth mineral inputs that are used in semiconductor production? >> the requirements are fairly modest on rare earths. other areas like batteries and others are much more significant. and we need a lot more, build the fabs, restore the supply chain and work through all of the other elements that would need that supply chain. that's the formula for a long-term success. >> thank you. >> thank you, i should say thank you, senator young, thank you, and senator schumer for the two of you on the u.s. competition act and shepherding through the process and coming back here today and adding that issue, senator young, has been concerned all along about the

china impact on this and appreciate his comments. senator hickenlooper? >> thank you, madam chair. first, i want to that you for your time here today and for your careers. you know, most americans look at these chips as some combination of machines and magic. and i think that's a consequence of a, you know, a whole careers dedicated to innovation and constantly trying to find a better way to do it. let me start with mr. gelsinger. i appreciate the recent announcement about the plant in ohio. i think the chips act is going to create a number of research and manufacturing jobs, all across the united states. i serve as chairman of the space and science subcommittee of this committee and i also chair the employment workplace safety subcommittee of the

health committee. health, labor and pensions. and that workplace education and training. and i guess i've spent a lot of time looking as we go into this great transition into clean energy, we're going into a great transition what a job means and how people are going to be trained. i think that the work force development that's required to navigate this great transition is going to be prodigious, for skilled stem work force needed to manufacture chips, rangers from anywhere from 100,000 to 300,000 workers by 2025. so in your view, how do you-- how do we help workers from relevant manufacturing fields upskill and reskill to satisfy those needs? >> and we believe that this is a critical topic, one that there are aspects of the chips act that are specifically to

address, but clearly this is an area for public-private partnership at scale. last week we announced 100 million initiative around our ohio plants, specifically in this area, right across the skills, you know, from community colleges, and you know, the most basic entry level manufacturing from focus on k through 12, you know, steam and stem educational programs, reaching into, you know, communities that haven't necessarily been affected such as underrepresented minorities, you know, the position of females in the workplace, particularly in tech fields, you know, has been unacceptable. so these will be some of the examples what those programs need to address, we also believe strongly that we need the best and the brightest, and with that, higher education work force over 50% view us stem universities are foreign nationals, right? and i believe that every one of those should get a green card stapled to their diplomas when

they graduate from a higher institution in america, we want the best and brightest in the u.s. taken together this will be a challenging endeavor and i look forward to digging into this more thoroughly with you, as well as the efforts that are a part of the chips act more broadly and work across the spectrum. we're pretty proud of our reputation in this area, but we know it's not nearly enough. >> as you're describing it, even if everything goes right and we do a better job of apprenticeship to get the kids in, especially young women, people of color and everything goes right we're going to be pressed. so i appreciate the-- your answer there. mr. mehrotra. and actually, i-- mr. gelsinger, you can answer this as well, the u.s. decline in global chip manufacturing has already been well-documented. obviously, foreign subsidies in the senate is what we've been

hearing about. they've taken chip manufacturing and assembling, even the design activities, more of that done overseas and i appreciate today's discussion on the importance of the chips act and the fabs act both of which i support strongly, but mr. mehrotra, would you discuss the role of other factors -- you touched on this a few minutes ago -- for instance, trade policies that play in the domestic semiconductor industry's rebalancing? >> well, i think again, it's important that we have a level playing field here in the u.s. with respect to our global competitors and level playing field certainly is intended to be achieved at the start of chips funding, $52 billion funding with support of investment tax credits and those important initiative to play catch up. of course, policies, related to

work force development, what you just discussed, are going to be extremely important, in terms of driving public and private sector partnerships. and then, i think it's definitely important that we have policies that drive greater free trade, open markets, and absolutely level playing field in terms of ip protection and partnership with those around the world who do share those same values with us. >> perfect. anything you want to add ms. archer or mr. gelsinger, either one? >> no, i think that many of the things that you talked about, very important. just last year, sorry, in the last two years, lam research jobs in the u.s. and our suppliers are feeling the pains of this tight labor market and so, again, anything that can be done to help expand the skilled

work force, everything from manufacturing workers to the most advanced researchers is very welcomed and some elements of this legislation are supportive of that. >> all right, will yield back. >> thank you, senator hickenlooper. we'll go to senator sinema. >> thank you chairman, and thank you for all of our witnesses for joining us on this topic. semiconductors are necessary technologies, that americans rely on every day, such as our phones, our cars, and our computers, and they're a key resource for our military. during the pandemic, we've seen the chip shortage directly impact everyday families across the country. arizona is a national leader on semiconductor manufacturing and research and development. the semiconductor industry employs over 20,000 arizonians, but over the past decades, america's domestic semiconductor manufacturing has fallen dramatically compared to the rest of the world leaving us vulnerable and forced to

rely on other countries. i was proud to be an original co-sponsor of the chip for america act to help restore america's leadership and semiconductor and manufacturing and in response to the chips act we've seen intel and epmc announce significant investments in arizona manufacturing, but congress needs to fund the chips grant. and the bill a year ago and we need to get the bill to the president's desk. my first question for mr. gelsinger, arizonans are proud of intel's long history in our state. following our chips for america provision i was thrilled at the 20 billion expansion in arizona that will translate to thousands of new arizona jobs. could you provide an update on intel's expansion plans on arizona, the new jobs that will be created and impact on domestic chip manufacturing? >> yeah, thank you very much. and i am very happy and proud to support that our arizona project is ahead of schedule.

and you know, we've been able to accelerate that by about a quarter. we expect that those facilities will begin coming on-line in late '24 and will employ 3,000 new intel employees, will support on the order of 5 to 6,000 construction jobs for the next couple of years, and we've been thrilled by the support and you know, in fact, we just had the first lady join us for our maricopa county education initiative that we just described there to start building the work force that we need and some of the ai for the future training programs. so, overall, the project is going well and like you, we are proud residents of arizona and growing there rapidly and finding a very, very warm welcome from the community as we continue to build the next phase of manufacturing in arizona. >> thank you, it's wonderful to hear you're ahead of skill.

>> as i mentioned previously, congress has yet to provide the final bill for the chips for american grants for our semiconductor industry. what does it mean for intel and particularly for arizonians expansion projects if congress cannot pass a semiconductor funding in a timely manner? >> as i've described it, we will go slower and smaller without the funding, and we'll go bigger and faster with the funding. i'm putting as much pressure on our profitability and our balance sheet as i possibly can. and i'm doing that at the great howls of wall street seeing our stock lowered, as a result of these substantial investments, but even though i'm making such substantial investments, it's not enough to restore american leadership on this technology. it's about restoring our position in the world, about bringing this industry back from asia and we're proud of our investments in ohio and oregon, and very prominently in

arizona and we also have even broader plans and you know, visions for the next phases of that that could be enabled by the chips act beyond what we've already announced, senator, and we'd be thrilled to discuss those further with you. >> thank you. you know, i've long supported efforts to advance stem education and ensure that arizona has a highly skilled work force that can help with technological advancement. i was thrilled to hear about the work force program partnering with mesa community college. can you describe that to semiconductor technicians in arizona and thanks again. >> in summary, what it is, it's a public-private partnership in terms of them helping us to establish the training programs we're helping with the curricula and basically, with very high probability of the graduates end up in a job as one of our facilities. so, it reduces the risk that the students have, it increases the effectiveness of the educational program, and

overall, it's building our work force for the future. overall, these types of programs have seen extremely effectively, and we're thrilled to be able to participate there with mesa community college, maricopa, right, and our other sites. this is the kind of model that lowers the cost of education, increases its effectiveness and prepares the work force of tomorrow. >> thank you. thank you. >> thank you, senator sinema. that concludes the first round unless there's someone quickly walking here, or on-line. i see that senator scott want today ask a second round question, my intention is to allow you to do that and then we would close out the hearing. again, thank you for this tentative schedule unless somebody out there who wants to quickly jump in here. with that senator scott. >> thank you, chair. and thank you for hosting this hearing, this is an important

issue, it's a lot of money. i think each of you, both-- all four of you run successful businesses and when you go to your boards and you say i want to make an investment or what do they say to you, how much cash do you get back. you don't say i'm going to get a bunch of revenues. that doesn't help you. you don't say a great economic impact or gosh, i'm going to add a thousand jobs. they say if you invest so much, you'll get something back. i'm disappointed that nobody came back and said you guys want us to spend $52 billion and nobody comes back and says for 52 billion the taxpayers of this country will get a certain dollar back. none of you, i think, would-- if you were the fiduciary would say i'm going to do it without getting a return. so if you have something like that i'd love to see if, i've not seen it. mr. gelsinger, intel apologized to chinese companies about american sanctions, could you

explain why that's appropriate? >> let me add to the earlier comment on roi. other, obviously as we've read in our written testimony we've provided economic impacts across our states and we're, now, certainly dig into that more with you for future. these are good roi investments. >> can i explain that for a second. revenues is not return. >> these are state economic impact returns. >> again, happy to have that conversation. >> and i mean, i probably did economic deals with florida, i didn't say hey, i'll bring you revenues. >> from a state perspective, revenues for state we'll be happy to dig into it. and return of industry from asian to american soil and also about national defense, these are policy issues for the nation that stretch well beyond the economic direct benefits. with respect to the china comments as well. you know, the situation was in

response to our supplier letter. this is a global supplier letter that we put in place to minimize risk, to manage our supply chain globally, no forced labor, no slavery, no other inappropriate actions. that global supplier letter inappropriately included a specific reference to one region in the world, it was a global letter covering many parts of our global supply chain that touches almost every country in the world. that was inappropriate. we've revised the letter. >> you think it's inappropriate to say you shouldn't buy products or that are created with slave letter? >> our letter makes it very clear that we do not support slave labor anywhere in the world. however, as a global letter we shouldn't have been calling out any particular region. >> i'd call out anybody for slave labor, i'd call it out by region. >> and we called out across the world and we've reinforced very, very aggressively our

policy matters are clear and consistent across the world and that's how we're going to continue to operate and we've been proud to operate for decades in the past. and for that, you can be confident that we will be enforcing. you know not just the u.s. policies obeying the laws of the u.s., but continue to be a great global employer and managing our supply chain with that in mind. >> buying products created with slave labor is wrong. let's go to the next one. as a company it seems to me your biggest risk is going to be exactly what's happening to russia, companies doing business in russia right now. if china, first off, you know, you can look right now. people are mad that companies are doing business in china because of the human rights issues. putting a million people in people for religion, taking away their prisoners, and hong kong citizens and threatening taiwan. and anybody doing business in china has a risk. aren't you, as a ceo of the

company, shouldn't you go to the board hey, we've got a problem here. the american people, european, you know-- the people who live in europe, hey, you've got to get out of china because they're about to invade taiwan and when they do, what are you going to do when you have all of these operations in china and the expectation is you shut down? why wouldn't you have the move-- why wouldn't you, on your own without getting a subsidy from the american government and american taxpayer say i've got to get out of there right now? >> the chinese market is almost half of the semiconductor market in the world. approximately half of that is manufacturing and supply, approximately half is consumption. it's the fastest growing semiconductor market in the world. so, if we're here to be the largest provider of semiconductors in the world we must be participating in the largest market in the world. >> i don't care about being the largest, i care about what do i have to do to make sure my company remains viable.

what are you going to do when china invades taiwan and you're expected to stop doing business in china? you're going to say no, i'm going to keep doing business in china because i don't care? >> our expectation is that we will continue a long practice 67 deepening our investments and manufacturing and r & d in the u.s. and supplying the global market for semiconductors according to the laws, policies and exports of the-- >> so it won't bother you when it invades taiwan. >> it will bother me enormously. >> you won't do anything about it. >> the concerns i have around the geopolitical situation drive the passion and urgency to build this industry in the u.s. this is a core reason why we are here. we have allowed this industry to shift to asian. it is time for us to get it back on to american soil. >> you should do it. >> and why are the taxpayers-- >> and that's why the chips act is so critical to get it done now. >> the point, you can't tell me

how a taxpayer gets return. there's no study, okay. you continue to apologize for american, you know, american position that we shouldn't be doing business with a communist country, where they have human rights violations and you won't acknowledge that you would stop doing business in communist china if they invade taiwan, that's wrong. >> senator scott, i don't think that's what mr. gelsinger said. i want to say for the record there's an analysis on a boston group, six years, $50 billion manufacturing incentive would generate 147 billion dollars to gdp in 1.1 million jobs. so, i do think that there are some analysis out there. every dollar from the federal government put towards the semiconductor research directs about 1650 to n.d.p. as a

dollar to investment ratio. so, there are some analysis out there. i do think that they're important to take a look at this. i also think that these issues of-- are very challenging to us in a global economy. i'm a person who supports trade. i think that trade changes culture. i think that that doesn't mean that we have bright lines. i think we have a lot of bright lines in the united states and one is about our national security and basically saying we don't want to have communication products that have government-back doors to them and we want anybody can be in the global semi chain. if your governor doesn't honor that aspect of making sure architectures are protected and secure we don't want to do business, but this bill is really going to be about us creating a framework in which the united states gets that next generation like my chart

said, the next generation supply chain here. i want to thank all of our witnesses. thank you for hanging in there from europe and you didn't get as many questions as the other people, but every time you talked mr. gelsinger wrote down what you said. and the reason i'm pointing that out is because i think that that is symbolic about the eco system that we're trying to create. if this all exists here in the united states, and you have those closer relationships, and the whole supply chain is talking to each other and they're talking about what their needs are and talking about the next generation, i guarantee that the united states will do the right things to help catch up on this shortage and lead the way in next generation technology. you heard from many of my colleagues who had various takes on this issue and you heard about senator rosen about her interest in the broadband system. i, too, have a very keen interest in our grid and

electrification and what we're going to do to, you know, we're not going to make any transformation without our grid providing more of the communications system. and so, there's just so many students before us. so, i also want to thank you, particularly mr. gelsinger, but obviously, our other witnesses. look, we want to see these companies driven by good engineering, it's called the information age for a reason. that means the students are there, but we need the engineers so i actually applaud some of the financial decisions you've been making because it's been based on good engineering and i guarantee you in the end that's rewarded by american investment, solid investment in this. we've led in the past and we wants to lead again and in the united states of america. thank you all for being here, the hearing will be open and the record for two more weeks, senators will have until wednesday, april 6th at noon to

submit questions for the record. witnesses will have two weeks to respond to those questions and we appreciate your diligence on that. but that concludes today's hearing. we're adjourned. [inaudible conversations]

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